Ripple is planning a major upgrade to the XRP Ledger, introducing a native Automated Market Maker (AMM), sparking interest in the crypto community. The AMM will be seamlessly integrated into the XRP Ledger DEX ecosystem, aiming to improve returns for liquidity providers and mitigate market price risks.
Ripple, the company behind XRP, is preparing for a significant upgrade to the XRP Ledger that has caught the attention of cryptocurrency enthusiasts. This update, aimed at introducing a native automated market maker (AMM), has sparked anticipation and curiosity in the crypto community.
The upcoming XRP Ledger update promises to bring a revolutionary feature. The XRP Ledger will seamlessly integrate this non-custodial AMM into its decentralized exchange (DEX) ecosystem. Its main objective is to optimize the profitability of liquidity providers while addressing the risks associated with market price fluctuations.
The XLS-30 upgrade will introduce native AMM to the XRP Ledger, allowing digital assets to be traded within automated liquidity pools. This development aims to expand the reach of the XRP Ledger within the decentralized finance (DeFi) sector. It will provide developers with the tools necessary to serve a broader audience of DeFi stakeholders.
The introduction of the AMM has led to debates about its possible impact on the price of XRP. An important question is whether the AMM, which primarily relies on XRP holders for liquidity provision, could put downward pressure on the value of XRP. The scenario envisioned here involves AMM using XRP tokens to balance liquidity pools, which could trigger a sell-off and influence the market price of the token.
CTO Perspective: Short-Term Selling Pressure
Responding to these concerns, David Schwartz, Ripple’s chief technology officer (CTO), admitted the likelihood of short-term selling pressure. He noted that if the AMM predominantly attracts XRP holders as liquidity providers, a temporary increase in selling pressure may occur. However, he expressed reservations about the magnitude of this effect and suggested that other market dynamics could counteract it.
Schwartz went on to explain that, in theory, AMM could contribute to the reduction of price volatility. This could be achieved if AMM sells XRP during price increases and buys it during price drops. This mechanism could transform the inherent volatility of the cryptocurrency market into a source of return for liquidity providers.
Market Forces and the Future of XRP
The XRP market, like most cryptocurrencies, is subject to a complex interplay of factors that influence its price. These factors include market sentiment, trading volumes, regulatory developments, and general trends within the broader cryptocurrency landscape. While the introduction of the AMM undoubtedly represents an important step for the XRP Ledger, these multifaceted dynamics will determine its immediate and long-term impacts on the price of XRP.
Ripple Price Sees Rally Amid Market Recovery
XRP has seen a 1.10% rise in value today, in sync with the ongoing recovery of the broader cryptocurrency market. XRP price is currently challenging the crucial threshold of $0.60.
The $0.60 level has significance from both a psychological and technical perspective, making it particularly intriguing to watch XRP’s performance in this context. A successful breach of this level may set the stage for further price gains, while a rejection could pose challenges for XRP holders. In the case of the latter scenario, our recent XRP price analysis outlines two critical support levels worth monitoring.
By Audy Castaneda